So far, we’ve given only a brief definition of processing. However, this is a fairly complex and specialized area of activity in the world of finance. That’s why today Bilderlings Pay is providing a more detailed overview on the topic.
”Processing” is an activity associated with the processing of information necessary for the execution of payments. Today, a typical processing company not only provides bank card payment services, including online, but also offers a whole range of services for the execution of electronic payments, including those made via mobile applications.
From simplicity to complexity
Generally, the following four participants are involved in payment card transactions:
– A bank-issuer of a payment card.
– A bank, or other financial or trading acquirer organization which is able to accept this card as a mutual settlement instrument.
– An internationally-certified security channel for transfer of financial information. Bilderlings Pay security standards are guaranteed by the Visa and Mastercard card systems certification, PCI DSS Lev.1 (from December 2015).
– A processing company that provides information and financial interaction between the first two entities.
The processing center performs the following algorithm:
– Identifies the status of the bank or banks participating in the transaction.
– Checks the validity of the payment card and its requisites.
– Checks the amount of money on the customer’s account and/or the availability of an overdraft function.
– Ensures the security of information transfer between the counterparties of the transaction.
– And, finally, executes the payment itself.
However, today the range of services of a typical processing company has expanded considerably. First, payment services via OCT (Visa) and MoneySend (Mastercard) cards appeared; recurrent payments and invoicing were added later. Today, an online merchant has the opportunity to accept payments directly through his website.
IT specialists call this type of servicing of a trading account, or a merchant account, “the integration of resource with processing system.” Essentially a button, “Pay by Card,” shows up on the website. This provides better opportunities for making transactions via mobile applications. Finally, Bilderlings Pay, for example, offers customers the opportunity of opening a simple, easy-to-use but multi-functional settlement account at the company’s website.
From this point of view, a processing company is a computing center with powerful hardware, specialized software, a team of IT specialists, lawyers, AML monitoring (Anti Money Laundering) service and technical support.
The risk factor
An important indicator of processing efficiency is transaction processing speed, which directly depends on the pass-through capacity of a company’s payment gate. This is a hardware-software module, which enables encrypting confidential information, as well as the secured exchange of information between the participants in a transaction.
If the pass-through capacity of a payment gate is insufficient, it will most likely create one or both of the following problems for an e-tailer who uses this service:
– Usually payment for services or goods on an e-tailer’s website with a merchant account (the “Pay” button) takes no more than 1.5—2 seconds. If, upon reaching the threshold level, the payment page just doesn’t open – the server of the processing company is overloaded with incoming requests. As a result, a client who has been already accustomed to receiving a quick result will most likely navigate to a competitor’s website.
– An e-tailer’s website “gets hung up” because the transaction is added to a long list of similar tasks which are awaiting their turn for execution. It can last up to half a minute. The buyer clicks on the “Pay” button and, without seeing any result, automatically pushes it for the second, third time… Finally, all the requests are processed. Of course, the e-tailer has to return the overpaid money, apologize, and most likely lose out on any repeat business from these customers.
Consequently, when choosing a processing company, you should choose one that can afford to run its own hardware and software.
The reliability factor
So, which parameters are most important when evaluating a processing company? Here are some points that you should pay close attention to:
– Time needed to connect and integrate your website into the system. Using the ready CMS modules recommended by Bilderlings Pay, this period is up to 14 days, which is more than two times shorter than the standard one-month term.
– Frequency of payments. Bilderlings Pay makes payments to customers with a small turnover twice a week, or when the minimum payment amount is reached. For larger clients, payments are usually made two times a day.
– Ensuring security and availability of an international license. This criterion is met by compliance with the PCI DSS payment card standard, which was developed in 2006.
– Meeting the demands of the market. The ideal scenario is when a processing company is able to see an untapped market solution or technical novelty before it becomes tomorrow’s hot topic.
– Backup for technical force majeure events. A processing company must have reserve capacities, which, in the event of an emergency, can quickly take on the full load – as well as backup power supply systems in case of power failure.
– Customer risk insurance and customer support. During transactions, clients’ confidential financial information is at the disposal of the processing center, which actually takes over a certain part of the bank’s responsibility. Therefore, it is logical for this responsibility to be indicated in the client’s contract.
It is safe to say that today’s processing solutions are no longer an “additional level of comfort” – they have become a necessity.
Subscribe to our page on Facebook to stay up-to-date on the latest news from the e-commerce world, and also contact Bilderlings Pay if you need to connect to a payment acceptance solution and we will find the best offer for you.